We are evaluating a project that costs $823,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 94,000 units per year. Price per unit is $40, variable cost per unit is $28, and fixed costs are $838,637 per year. The tax rate is 35 percent, and we require a 20 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 11 percent.
Calculate best case NPV.
Calculate worst case NPV.